Nigeria is a leading nation in the extraction of hydrocarbon fuels and has enormous potential for renewable energy.
At the same time, Nigeria’s entrepreneurial culture and economic footprint will help make Nigeria a leading nation in the global energy markets.
1. Why Nigeria’s energy industry plays such a crucial role for Africa as a whole.
Nigeria is the largest economy in Africa. Nigeria’s influence extends far beyond its borders and the country is characterized by its wealth of resources, languages and peoples. But that’s not all: because of its vast geography, the people of this immense country are at home in different climatic zones, which means that the central government has to respond to the particularities and interests of different regions in very different ways.
2. The Nigerian energy industry is at a crossroads and is in an incredible catch-up process to build its own energy infrastructure independent of foreign countries.
Nigeria is best known for its oil wealth, but although the country has huge oil reserves in the south of the country, there is very little capacity to process these oil deposits even in oil refineries. The processing often takes place in other countries and the refined oil must then be imported into Nigeria, but this is expected to change in the near future as the government plans to build its own oil refinery in the south of the country.
However, this will take a few more years, depending on whether or not the Nigerian government is able to find private investors for the construction and operation of oil refineries, who are also willing to tie up the capital they invest in oil production facilities in the country over the long term. At some levels, capital invested in the construction of technical infrastructure is also misused, with the result that projects take much longer and require more capital than expected, with the end result that the projects are no longer profitable. No other investors dare to reinvest in the expansion of technical infrastructure. This hinders the development of Nigeria’s infrastructure for oil production and the processing of oil. However, investors have expressed interest in investing in the expansion of oil production facilities and, in particular, the development of oil refineries.
For oil production platforms, for example, there are plans to build them as floating platforms near the Nigerian coast near Lagos. The success of such and similar projects will determine whether future investors will prefer to invest in other West African countries such as Ghana, which are also English-speaking. Overall, it should be noted that Nigeria is benefiting from the economic growth and thriving entrepreneurship found throughout Africa, including East Africa. New economic networks are emerging to help Nigeria achieve greater economic growth. The energy industry is the backbone of all other economic and entrepreneurial activities. Without them, the economic successes achieved so far would certainly not have materialized. Above all, it is important that we no longer depend on just one energy resource, oil in the case of Nigeria, and that we diversify into renewable energies from an energy policy perspective.
3. Why the construction of oil refineries in Nigeria has failed so far and why the Nigerian government wants to diversify into other energy sources.
The ongoing problem with Nigerian oil production is that oil companies and oil refineries need higher prices for oil (and natural gas) to make the processing of oil more attractive and to burn off some of the quantities that could otherwise be used without having to resort to these leftovers. Unfortunately, price does not yet justify efficient use of the huge quantities of oil produced. However, there are already many potential customers that the quantities of oil production in southern Nigeria have been processed to the customers to bring them, so logistics is a secondary point, despite the huge distances in the country itself. Plans are also being made to build smaller liquid gas terminals in the south of the country, which will be used to import natural gas into Nigeria, among others from the United States. To what extent this is a long-term solution, also from the point of view that Nigeria has a fossil fuel, still needs to be explained more precisely.
4. Solar energy has the potential to meet Nigeria’s electricity needs, mainly due to its favourable geographical location near the equator.
The Nigerian government is well aware that solar energy is an ideal energy source for the energy supply of the population, and especially in the more decentralized areas in the north of the country can be used. The use of solar energy does not necessarily require a centrally controlled high-voltage grid, which would entail huge costs, which Nigerian electricity prices do not yet provide. Nevertheless, there is a huge potential for electricity supply for the population, as the majority of the population is not connected to the power grid. Part of the population receives electricity illegally, which further increases the price of electricity for end customers, who also invest indirectly in the expansion of the power grid.
5. Waste incineration is another lucrative way to generate electricity.
Waste incineration is another unsuspected potential for energy production. In theory, the entire city can be supplied with electricity from the household waste generated by the city of Lagos. There are currently plans to build waste incineration plants in major urban centers throughout West Africa.